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Three markets to watch next week

The past week was marked by crude oil prices returning to triple digits on expiring September contracts and a continuation of the equity market selloff. Geopolitics once again served as the primary driver for investors, fueled not only by the situation in the Middle East but also by broad new US tariffs. Wall Street earnings season delivered solid corporate results, though these proved insufficient to lift investor sentiment. A fresh wave of reports from tech giants such as Microsoft and Apple might alter that dynamic. Furthermore, decision day arrives for two key central banks, namely the Federal Reserve and the Bank of Japan. Given this concentration of high-impact events, three markets warrant close attention in the coming days: USD/JPY , Gold and US100 .

USDJPY

The Japanese currency has struggled recently, with the past week defined by mounting inflationary pressure in Japan driven in part by higher global energy costs. This week brings a direct showdown between two major central banks. On Wednesday, the FOMC will announce its policy decision, followed by the second press conference from the new Fed Chair Kevin Warsh. On Friday, the Bank of Japan will present its stance on interest rates, preceded in the morning by the Tokyo consumer price index release. Market consensus anticipates that both the Fed and the BoJ will hold interest rates at current levels, with the BoJ policy rate currently at 1.0 percent. Investors will focus heavily on potential guidance regarding future monetary tightening, particularly given that the yen trades near 40-year lows alongside rising import costs. Historical currency interventions in Japan demonstrate that verbal pressure alone, lacking decisive BoJ action, offers only temporary relief for the yen. Moreover, sentiment conveyed by the US central bank remains the primary catalyst for USD/JPY trends. Should the Fed maintain a hawkish stance while the BoJ holds back from aggressive signals due to growth concerns, USDJPY could resume its upward trajectory toward the 165 level. Conversely, a hawkish surprise from the BoJ, supported by a hotter Tokyo CPI reading and upwardly revised inflation forecasts, could trigger a sharp rally in the yen and force a rapid unwinding of massive speculative short positions.

Gold

While last week was shaped by shifting sentiment surrounding Middle Eastern geopolitical tensions and oil prices, this week presents a direct test for the gold market from US monetary policy and incoming economic data. The principal catalyst for volatility will be Wednesday’s FOMC decision, followed on Thursday by US GDP figures and the June PCE inflation metric, which remains the Federal Reserve’s preferred inflation gauge. Gold continues to show high sensitivity to real interest rates and the trajectory of US Treasury yields. The bullion’s historic gains during periods when rate cuts are priced in clearly illustrate this relationship: as real yields decline, capital shifts smoothly into non-yielding assets. If Thursday’s PCE report points to persistent inflationary pressures and the Fed signals that rates must remain elevated for longer, gold could stay under pressure, particularly if crude oil marches back toward 100 dollars per barrel. In the alternative scenario, featuring a cooler PCE reading and waning geopolitical risk, the precious metal would gain strong momentum to break out of its recent downtrend.

US100 (Nasdaq 100 Futures)

The past week delivered another wave of selling across the global semiconductor and AI memory sectors. This week introduces the next slate of Big Tech quarterly earnings on Wall Street, coinciding directly with the Federal Reserve meeting. On Wednesday, Microsoft and Meta Platforms will report their quarterly results, followed by Apple and Amazon on Thursday. These announcements overlap with the FOMC interest rate decision on Wednesday and the US GDP and PCE releases on Thursday. Investors will scrutinize not only top-line revenue growth but primarily the return on capital expenditure dedicated to artificial intelligence infrastructure. Stretched valuations among Big Tech firms leave a remarkably narrow margin for error. Market dynamics seen during previous tech corrections demonstrate that even minor disappointment regarding forward margin outlooks can trigger index-wide selling, regardless of robust current earnings. Strong reports from market leaders coupled with measured commentary from the Fed could provide the US100 with the momentum needed to rebound from its recent pullbacks. Conversely, disappointing forward guidance paired with hawkish rhetoric from Kevin Warsh risks deepening the ongoing correction.

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EUR/JPY Price Forecast: Cross consolidates under 187.00, bulls target 188.00

  • EUR/JPY remains capped within 186.00-187.00 as intervention fears linger.
  • RSI holds bullish territory, signaling buyers retain momentum advantage.
  • Break above 187.00 exposes YTD high and 190.00 resistance.

The EUR/JPY consolidates around 186.00, edges down by 0.06% amid a souring of risk appetite amid the escalation of the US-Iran war, and strengthens safe-haven assets like the Japanese Yen.

EUR/JPY Price Forecast: Technical outlook

The EUR/JPY trades sideways after reaching the year-to-date (YTD) high of 187.95. The cross-pair dipped toward the 183.00 area following the Bank of Japan’s (BoJ) last intervention, and since then buyers have reclaimed key resistance levels to reach the 186.00 mark.

At the time of writing, the EUR/JPY remains capped within the 186.00-187.00 range, amid fears that Japanese authorities could intervene in the foreign exchange markets. But bulls seem to be gaining momentum as indicated by the Relative Strength Index (RSI) in bullish territory.

Buyers need to clear 187.00 to challenge the YTD high at 187.95. Once those levels are taken out, the next resistance would be the 189.00 mark ahead of the 190.00 psychological level. 

On the other hand, if sellers push the EUR/JPY below the July 20 low of 185.35, it exacerbates a move toward the 50-day Simple Moving Average (SMA) at 185.20, followed by the 100-day SMA at 185.05. Still lower lies the 200-day SMA at 183.29.

EUR/JPY daily price chart

EUR/JPY daily chart
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Japanese Yen remains pinned near 40-year low as Fed-BoJ rate gap keeps carry trade active

  • USD/JPY consolidates the previous day’s strong gains amid looming intervention risks.
  • The wide US-Japan rate differential holds back the JPY bulls from placing aggressive bets.
  • US-Iran tensions and Fed rate hike expectations favor USD bulls, supporting spot prices.

The USD/JPY pair edges lower on Friday as bulls turn cautious in anticipation of a potential government intervention to prop up the Japanese Yen (JPY). Nevertheless, spot prices remain within striking distance of the four-decade high, touched on Thursday, and the 164.00 mark amid a supportive fundamental backdrop.

A stark contrast in monetary policy between Japan and the rest of the world keeps the so-called carry trade active, which might continue to undermine the JPY. Despite the recent Bank of Japan (BoJ) rate hike to 1%, or the highest since 1995, borrowing costs in Japan remain exceptionally low relative to other major economies, including the US. Furthermore, economic risks stemming from energy supply disruptions due to the Middle East conflict contributed to the JPY’s relative underperformance.

The US military announced that it has completed another round of strikes against Iran on Thursday, marking the 13th straight night of operations. Meanwhile, Iran and its allies launched retaliatory strikes against US-linked military assets in Kuwait, Bahrain and Jordan. Adding to this, Iran-aligned Houthis extended the Middle East war to a second major shipping chokepoint and struck two Saudi oil tankers in the Red Sea, describing the action as part of a naval blockade against Saudi Arabia.

This comes on top of the closure of the Strait of Hormuz and further exacerbates supply disruption concerns, lifting crude oil prices to a fresh high since June 11 on Thursday. Investors remain worried that elevated energy prices will rekindle inflationary pressure and force major central banks, including the US Federal Reserve (Fed), to adopt a more hawkish stance. Moreover, data showed on Thursday that US Jobless Claims fell to the lowest level since September 1969, pointing to a resilient labor market.

This reaffirmed market expectations that the US central bank will raise borrowing costs by the end of this year, which favors the US Dollar (USD) bulls and backs the case for the emergence of dip-buying around the USD/JPY pair. Traders, however, seem hesitant and opt to move to the sidelines ahead of the highly anticipated FOMC policy meeting next week. Nevertheless, spot prices remain on track to register strong weekly gains for the third straight week and seem poised to climb further.

Japanese Yen Price This week

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the Swiss Franc.

USDEURGBPJPYCADAUDNZDCHF
USD0.39%0.99%0.87%0.45%-0.33%0.83%0.99%
EUR-0.39%0.61%0.43%0.06%-0.71%0.44%0.59%
GBP-0.99%-0.61%-0.17%-0.54%-1.30%-0.16%0.03%
JPY-0.87%-0.43%0.17%-0.32%-1.14%-0.09%0.22%
CAD-0.45%-0.06%0.54%0.32%-0.74%0.24%0.58%
AUD0.33%0.71%1.30%1.14%0.74%1.16%1.35%
NZD-0.83%-0.44%0.16%0.09%-0.24%-1.16%0.20%
CHF-0.99%-0.59%-0.03%-0.22%-0.58%-1.35%-0.20%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

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Japanese Yen flatlines near multi-decade low after CPI inflation data

  • USD/JPY steadies around 163.90 in Friday’s early Asian session. 
  • Japanese CPI inflation rose to 1.7% YoY in June from 1.5% in May. 
  • Trump vowed to punish Iran for Houthi attacks in the Red Sea. 

The USD/JPY pair holds steady near 163.90 during the early Asian session on Friday. However, the Japanese Yen (JPY) remains near a multi-decade low against the US Dollar (USD). The preliminary readings of the US S&P Global Purchasing Managers Index (PMI) will be published later on Friday. 

Data released by the Japan Statistics Bureau on Friday showed that Japan’s National Consumer Price Index (CPI) inflation rose to 1.7% YoY in June, up from 1.5% in May. Meanwhile, the core CPI came in at 1.6% YoY in June, versus 1.4% prior. The figure came in line with the market consensus. This is the first rise in core inflation since March.

The so-called “core-core” inflation rate, which strips out prices of fresh food and energy, fell to 1.7% YoY in June, compared to the previous reading of 1.8%. This figure registered the lowest since August 2022.

This reading came just days before the Bank of Japan (BoJ) policy meeting, where the central bank is widely expected to leave interest rates unchanged. Japan’s National CPI inflation report has little to no impact on the JPY as traders are on high alert for possible intervention from Japanese authorities. 

Finance Minister Satsuki Katayama on Wednesday warned markets that authorities stood ready to take “appropriate and bold action.” Katayama added that Japan’s policy on potential intervention remained unchanged and that it would take action if necessary.

Escalating tensions in the Middle East could boost the Greenback against the JPY in the near term. Reuters reported on Thursday that US President Donald Trump said the US would hold Iran responsible for the Houthis’ actions and warned Iran and its Houthi allies would both soon receive a “major military punishment.”

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Chart of The Day – No changes in the Far East, USD/JPY Hits New Highs

USD/JPY is breaking out to new 40-year highs above 163.30 , and the market is signalling that the acceleration in the pace of the BOJ’s rate rises is already largely priced in.

Traffic conditions on the D1

The price has broken through the previous resistance level of 163.00 (purple line) and is reaching new highs in the 163.30–163.40 range, whilst the RSI (14) remains in a strong uptrend at around 69.4, close to the overbought zone. The candlesticks are holding above the EMA50 (161.32), EMA100 (160.13) and EMA200 (158.12), and the EMA configuration (rising, in the order 50 > 100 > 200) confirms a strong bullish trend. The price is close to the upper Bollinger Band (163.92), which signals strong momentum but also the risk of a short-term correction before the next attempt to break through the resistance at 164.00.

Why do the markets already price in faster BOJ rate rises?

The OIS (overnight index swap) market for 22 July 2026 implies a rate of 0.981 per cent, compared with an effective rate of 0.977 per cent, whilst contracts up to the 18 December meeting are already pricing in a rise to 1.277 per cent – effectively discounting approximately 1.2 rate rises in full. This means that reports of the BOJ’s readiness to accelerate the pace of rate rises come as no surprise to the market – investors began pricing in a more aggressive cycle well ahead of the consensus among economists.

This is also confirmed by the table of 1-month price changes: the cumulative change (“Total Change 1M”) for Japan is zero, which indicates that the market is no longer revising its forecasts upwards, but is instead stabilising following the earlier movement – the “faster pace” is, to a large extent, already behind us in terms of prices. Source: Bloomberg Financial LP

Carry trade remains dominant despite rate rises

The interest rate differential between Japan (1.00%, following a rise to a 31-year high) and the effective US rate (3.63%) remains huge, and the two-year US-Japan yield spread has widened to 285 basis points – its widest level since August last year. Even a potential further 25 bp rate rise would do little to reduce the appeal of this spread, which is fuelling carry trades based on the low cost of yen-denominated financing relative to high-yielding currencies such as the BRL, MXN and AUD.

The fundamental ‘loop’ driving the yen’s weakness

Apart from monetary policy, the yen is suffering from a ‘doom loop’ – Prime Minister Sanae Takaichi’s loose fiscal policy (debt-to-GDP ratio over 200 per cent) combined with the BOJ’s insufficiently tight monetary policy, which is pushing the yield on 10-year JGBs up to 2.90 per cent, the highest level in 30 years. Finance Minister Satsuki Katayama has once again signalled her readiness to take “decisive action” in the foreign exchange market, however, interventions to date (totalling around US$215 billion since 2022) have failed to reverse the trend of yen weakness on a sustained basis, which undermines the credibility of such announcements in the eyes of investors.

The options market confirms that there are no fears of a shock

The falling 1-month ATM implied volatility for USD/JPY since 2022, despite the deepening weakness in the spot market, suggests that options are not pricing in any significant risk of a sudden reversal – such as a sharp intervention or an unexpected rate hike – but rather a continuation of the current narrative regarding the currency. Source: Bloomberg Financial Lp

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Trade of The Day – GBP/JPY

Facts:

  • The bounced off the lower limit of 1:1 structure at 217.52
  • Main trend on the pair remains upward

Recommendation: Trade: Long GBPJPY at market price Target: 220.16 Stop: 216.92

Opinion: Looking at GBPJPY chart, one can observe that the price reached the key technical support on Tuesday. This support is marked with the lower limit of 1:1 structure (green rectangles), as well as previous price reactions. In addition the price sits above the 100-period moving average from the H4 interval. Should buyers manage to hold the price above the support area 217.52-217.80, another upward impulse may be on the cards. We recommend taking a long position on GBPJPY at market price with two targets: 215.85 and 216.30 We recommend placing a stop loss order at 216.92

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Japan Signals Readiness to Act on Yen Weakness

Japan’s Finance Minister Satsuki Katayama said on Wednesday that the government remains prepared to intervene in currency markets if excessive exchange-rate moves threaten financial stability, after the yen weakened beyond JPY 163 per U.S. dollar to its lowest level in about 40 years. Speaking to reporters, Katayama declined to comment on specific exchange-rate levels but reiterated that authorities stand ready to act if necessary. The remarks reinforce the government’s long-standing position of closely monitoring currency movements and signal that policymakers remain willing to step into the foreign-exchange market should volatility become excessive, even as they avoid specifying a level that could trigger intervention.

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EUR/JPY Price Forecast: Tests ascending triangle top above 186.00

  • EUR/JPY is testing the ascending triangle’s upper boundary near 186.20.
  • The 14-day Relative Strength Index at 57.48 suggests constructive but not overbought momentum.
  • The initial support lies at the nine-day EMA at 185.66.

EUR/JPY extends its gains for the second successive day, trading around 186.20 during the Asian hours on Wednesday. The currency cross is retaining a bullish near-term bias as it holds above both the nine-period and 50-period Exponential Moving Averages (EMAs).

The 14-day Relative Strength Index (RSI) at 57.48 suggests constructive but not overbought momentum, reinforcing the scope for further gains as long as price stays above the nearby EMA band.

The daily chart technical analysis shows the currency cross is testing the upper boundary of the ascending triangle around 186.20, suggesting growing bullish momentum and a potential breakout to the upside. A decisive break above the triangle could trigger a powerful bullish continuation, which could expose the all-time high of 187.95, which was recorded on April 17.

On the downside, primary support sits at the nine-day EMA of 185.66, with additional backing at the 50-day EMA of 185.18 and the lower edge of the ascending triangle near 185.10. A sustained break below the triangle pattern would undermine the bullish setup, exposing the EUR/JPY cross to deeper downside toward the five-month low of 181.87, recorded on March 16, and the seven-month low of 180.81.

Chart Analysis EUR/JPY

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD-0.07%-0.07%-0.03%-0.02%-0.05%-0.06%-0.00%
EUR0.07%0.00%0.07%0.05%0.00%0.03%0.07%
GBP0.07%-0.01%0.04%0.05%-0.00%0.01%0.06%
JPY0.03%-0.07%-0.04%0.00%-0.02%-0.04%0.03%
CAD0.02%-0.05%-0.05%-0.01%-0.03%0.02%0.02%
AUD0.05%-0.01%0.00%0.02%0.03%0.02%0.05%
NZD0.06%-0.03%-0.01%0.04%-0.02%-0.02%0.03%
CHF0.00%-0.07%-0.06%-0.03%-0.02%-0.05%-0.03%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).